iPhone 15/Plus Am I being overtaxed by Apple

[canapple]

I’ve noticed a change to Apple Trade-In policies in Canada. In the past, when I received a trade-in refund, it consisted of the promised trade-in value plus tax. The effect was that I only paid tax on the net cost of the device, not the full retail price.

This year I only received the promised trade-in value, meaning that I paid tax on the full cost of the device. I spoke with several people at Apple, and no one was able to provide an explanation of this change.

Here is an example, using round numbers and a figure of 10% sales tax.

In the past, the process looked like this:

• If a new iPhone cost $1000, and my trade-in was valued at $500, I paid $1100 up front ($1000 plus 10% tax). When the trade-in was processed, I received $550 in refund ($500 plus 10% tax). My net cost was $550.

This year, it worked like this:

• If a new iPhone cost $1000, and my trade-in was valued at $500, I paid $1100 up front ($1000 plus 10% tax). When the trade-in was processed, I received $500 in refund. My net cost was $600.

Has anyone else experienced this? Does the process work the same for an in-store trade in?

I’m curious about this because I’m pretty sure that Canadian tax law only allows retailers to charge tax on the net value after trade-in.

Thanks for your help!

 

[Rafterman]

We're all being overtaxed by everyone.

Honestly. I never heard of anything where you didn't pay the full tax on the cost of something - trade-in or no trade-in. Maybe that was a Canada thing though. In the US, the gub'mint never misses an opportunity to tax you.

 

[cousintim]

I’ve noticed a change to Apple Trade-In policies in Canada. In the past, when I received a trade-in refund, it consisted of the promised trade-in value plus tax. The effect was that I only paid tax on the net cost of the device, not the full retail price.

This year I only received the promised trade-in value, meaning that I paid tax on the full cost of the device. I spoke with several people at Apple, and no one was able to provide an explanation of this change.

Here is an example, using round numbers and a figure of 10% sales tax.

In the past, the process looked like this:

• If a new iPhone cost $1000, and my trade-in was valued at $500, I paid $1100 up front ($1000 plus 10% tax). When the trade-in was processed, I received $550 in refund ($500 plus 10% tax). My net cost was $550.

This year, it worked like this:

• If a new iPhone cost $1000, and my trade-in was valued at $500, I paid $1100 up front ($1000 plus 10% tax). When the trade-in was processed, I received $500 in refund. My net cost was $600.

Has anyone else experienced this? Does the process work the same for an in-store trade in?

I’m curious about this because I’m pretty sure that Canadian tax law only allows retailers to charge tax on the net value after trade-in.

Thanks for your help!

Since this is a GST/PST/HST issue, your question is better posed to CRA or your province's tax authority.

 

[canapple]

Thanks for the responses. The main thing that I’m focused on is how Apple has changed its practice. The last time I did a trade-in (in 2021) the tax was refunded by Apple.

 

[Zayway86]

Since this is a GST/PST/HST issue, your question is better posed to CRA or your province's tax authority.

This comment is just off base.

 

[NotApplicable]

We're all being overtaxed by everyone.

Honestly. I never heard of anything where you didn't pay the full tax on the cost of something - trade-in or no trade-in. Maybe that was a Canada thing though. In the US, the gub'mint never misses an opportunity to tax you.

Trading in a car at time of purchase of a new one in many (most?) states is such that you only pay tax on the difference

 

[cousintim]

Trading in a car at time of purchase of a new one in many (most?) states is such that you only pay tax on the difference

First, the dude is in Canada, so that is why I directed him to the Canadian tax jurisdictions. Second, the tax treatment of trade-in phones varies by state. For example, in California, "The value of a trade-in accepted on the purchase of a mobile phone, tablet, or other wireless device is taxable."

 

[cousintim]

This comment is just off base.

OK, sure.

 

[r.d]

I have been wondering this same thing. I traded in my 14 Pro Max this year and only received the promised trade-in value, without the tax.

In Canada, per CRA tax laws, transactions where a trade-in is applied should be charged tax on the net value, regardless if it's a car or a phone, as long as it's in the same transaction.

CRA - TRADE-IN APPROACH

I have done trade-ins with Apple in the past, with the latest one before the iPhone 15 being in 2022 with a MacBook Pro purchase/trade-in, and I did receive the trade-in amount plus tax as a refund. I went back into my transactions to verify this. Also did an iPhone trade-in in 2021 and the tax treatment was correct.

I understand that different jurisdictions around the world have different tax treatment on trade-ins. But as far as I know, in Canada, you should only be charged tax on the net amount. I thought maybe something changed recently, but I have not been able to find any documentation anywhere (i.e. if certain products are excluded). I work in Finance so I'm quite close with this kind of stuff.

Contacting Apple is useless, as their customer service has gone downhill lately, and their agents are in Texas which have no knowledge of Canadian tax laws.

I will be reporting a claim to CRA for suspected tax cheating. I recommend you do the same!
Reporting suspected tax or benefit cheating in Canada

Just found Apple Canada corporate details. Might give this number a call when I have some time:

 

[canapple]

I have been wondering this same thing. I traded in my 14 Pro Max this year and only received the promised trade-in value, without the tax.

In Canada, per CRA tax laws, transactions where a trade-in is applied should be charged tax on the net value, regardless if it's a car or a phone, as long as it's in the same transaction.

CRA - TRADE-IN APPROACH

I have done trade-ins with Apple in the past, with the latest one before the iPhone 15 being in 2022 with a MacBook Pro purchase/trade-in, and I did receive the trade-in amount plus tax as a refund. I went back into my transactions to verify this. Also did an iPhone trade-in in 2021 and the tax treatment was correct.

I understand that different jurisdictions around the world have different tax treatment on trade-ins. But as far as I know, in Canada, you should only be charged tax on the net amount. I thought maybe something changed recently, but I have not been able to find any documentation anywhere (i.e. if certain products are excluded). I work in Finance so I'm quite close with this kind of stuff.

Contacting Apple is useless, as their customer service has gone downhill lately, and their agents are in Texas which have no knowledge of Canadian tax laws.

I will be reporting a claim to CRA for suspected tax cheating. I recommend you do the same!
Reporting suspected tax or benefit cheating in Canada

Just found Apple Canada corporate details. Might give this number a call when I have some time:
View attachment 2292141

Thanks for adding your story. I’m glad to know I’m not alone! I will follow up along the lines you suggest.

 

[MarkNewton2023]

I’ve noticed a change to Apple Trade-In policies in Canada. In the past, when I received a trade-in refund, it consisted of the promised trade-in value plus tax. The effect was that I only paid tax on the net cost of the device, not the full retail price.

This year I only received the promised trade-in value, meaning that I paid tax on the full cost of the device. I spoke with several people at Apple, and no one was able to provide an explanation of this change.

Here is an example, using round numbers and a figure of 10% sales tax.

In the past, the process looked like this:

• If a new iPhone cost $1000, and my trade-in was valued at $500, I paid $1100 up front ($1000 plus 10% tax). When the trade-in was processed, I received $550 in refund ($500 plus 10% tax). My net cost was $550.

This year, it worked like this:

• If a new iPhone cost $1000, and my trade-in was valued at $500, I paid $1100 up front ($1000 plus 10% tax). When the trade-in was processed, I received $500 in refund. My net cost was $600.

Has anyone else experienced this? Does the process work the same for an in-store trade in?

I’m curious about this because I’m pretty sure that Canadian tax law only allows retailers to charge tax on the net value after trade-in.

Thanks for your help!

That was pretty much what I experienced during in-store trade in. Make sense to me.

 

[canapple]

That was pretty much what I experienced during in-store trade in. Make sense to me.

Thanks! Was your trade in in Canada or the US?